Fitch assigns IG credit rating to Resorts World Las Vegas

Posted on: July 18, 2023, 10:08h. 

Last updated on: July 18, 2023, 10:08h.

Resorts World Las Vegas received a “BBB-” credit rating from Fitch Ratings, which is the lowest in the investment-grade spectrum.

Resorts World Las Vegas
Resorts World Las Vegas. Fitch Ratings gave the venue a “BBB-” credit rating. (Image: Resorts World Las Vegas) (Image: Jeff Scheid/Nevada Independent)

This is one grade below the “BBB” rating given to the parent company Genting Bhd. Fitch states that the Las Vegas venue is one of the three key properties for the Genting gaming empire, along with a flagship property in Malaysia and Resorts World Sentosa in Singapore. Thus, the parent company has a motive to offer financial support to the Las Vegas venue.

Fitch noted, “We expect RWLV to contribute over 20% of GENT’s proportionately consolidated earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) from 2024. The ‘Medium’ operational incentive is driven by the sharing of the Resorts World brand and integrated management decision-making, despite limited operational synergies, as GENT’s casinos operate independently.”

The $4.3 billion Resorts World Las Vegas, which has the highest construction costs among all integrated resorts on the Strip, opened in June 2021.

Resorts World Las Vegas Ramp Up Has Been Slow

An ongoing criticism of Resorts World Las Vegas by analysts is its slow ramp-up. This is understandable considering that its first year of operations was affected by the aftermath of the coronavirus pandemic.

However, this is not a time for excuses, especially when visitation to the Strip remains strong, hotel occupancy rates are high, convention business is rebounding, and Las Vegas is set to host several major events in the coming months. These factors could benefit the Genting property.

The Genting venue, the first new property on the Strip in over a decade, is located at the northwest end where the Stardust Casino once stood.

Fitch added, “It also faces significant competition in a mature market and will have to gradually establish its brand identity to effectively compete. We estimate a ramp-up towards an EBITDAR of $350 million by 2025, from around $115 million in 2022.”

The research firm also highlighted that the property’s 2022 EBITDAR and margins were disappointing, indicating vulnerability to a surge in inflation.

Resorts World Las Vegas Rating Factors

Bondholders hoping for an upgrade to RWLV’s credit rating should also hope for an upgrade for parent Genting or “perceived strengthening of operating or legal incentives for GENT to support RWLV,” according to Fitch.

If Genting experiences a downgrade or if operating and legal incentives weaken significantly, it may have an adverse effect on RWLV’s rating by Fitch.

For now, Genting’s “BBB” credit rating does not appear to be in danger of a downgrade, as the operator has the resources to maintain that rating, which is two notches above Las Vegas Sands and on par with Hard Rock International.

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